1. Field of the Invention
The present invention relates generally to distribution of goods and/or services, and more specifically to accounting within a chain of distribution. Even more specifically, the present invention relates to accounting to successive levels in a multi-level marketing structure.
2. Discussion of the Related Art
Multi-level marketing is a method of sales promotion in which a commission is paid not only to the point of sale distributor that is responsible for making a sale, but also to potentially several levels of distributors that are associated with the point of sale distributor. In a multi-level marketing system, a person acts as both a distributor (moving directly or indirectly products and/or services to others), and as a recruiter (enlisting other persons to distribute the products or services).
A distributor that has enlisted other distributors may be considered a primary distributor that is “up line” with respect to the distributors that they have enlisted. Each distributor enlisted may go on to enlist other distributors so that a chain of distributors is created. Each distributor that is successively enlisted by other distributors within the same chain is “down line” from the primary distributor. Thus, a distribution and recruiting network is created in which a primary distributor has many down line distributors wherein the primary distributor either directly or indirectly assisted in enlisting the down line distributors.
To provide an incentive to distributors so that the distributors are inclined to recruit other distributors, organizations that market in a multi-level structure typically provide a commission to each distributor that is up line from the point of sale distributor. In such a system, the up line distributors, including the primary distributor, typically receive a small piece of the fees collected, in the form of a commission, for the product and/or services distributed. Thus, the primary distributor may receive a commission for each sale made by each distributor that is in their down line.
To assist proper accounting so that each distributor receives their appropriate commission, some organizations utilizing multi-level marketing have allocated a distributor number to each distributor in an existing distribution network so that, e.g., a distributor may distribute product and/or service catalogs (e.g. printed paper catalogs) with their distributor number located thereon to a non-distributor, i.e., a retail consumer, and receive credit for a sale made to the retail consumer ordering from that catalog. In such a system, however, there is no commission type incentive for the retail consumer to further circulate the catalog to other potential purchasers. Thus, much of the marketing power derived from commission based incentives ends when the catalog is placed in a retail consumer's hands.